The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Customer experience’ Category

Alfa follows a good internet media strategy | Russia

Daniel notes good practices in managmenent of a merger using web media.

Alfa follows a good internet media strategy – covering its merger with Kazna | Retail Banking in Russia

An absolute majority of posts at this blog deals with operational aspects of banks business – but recent coverage of Alfa-Bank and Severnaya Kazna merger gives good examples on how a Web-media strategy of a bank can be formulated to better suit the wavering clients of the banks, and convey a positive image of banks in merger.

Written by Colin Henderson

August 18, 2009 at 14:53

Posted in Customer experience

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All banks have the same strategy | what happened to the Starbucks strategy?

It was refreshing to read this piece, and takes us exactly where innovation in financial services ought to be going – the new (old) grand ideas.

Starbucks should start banking | FT

What if Starbucks opened an online-only retail bank offering competitive deposit rates and a modest range of loans and mortgages? It could do that by partnering with a finance company such as ING, which has the appropriate banking licences.

All it would need to do is install ATM machines in its outlets, which would involve investing some money but would allow it to get more out of its existing branches.

National supermarkets in the UK, such as Sainsbury and Tesco, have opened retail banks and placed ATM machines in their branches, but there is no national grocery chain in the US with a comparable reach. Even Wal-Mart lacks outlets on most urban high streets.

I recall the brainstorming sessions in the 90’s at the bank, where the discussion about competition arose not from other banks but from:

  • Starbucks levering their distribution and cards as a bank
  • ebay or Amazon offerring a credit card
  • internet only banks – ING was on the horizon – mbanx and Wingspan already out there
  • whether to join the S1 online banking commoditised platform
  • offer an All in One account that pulled together lending and deposits into one account
  • how to deal with the role of aggregation- offer it, join it, or ignore it
  • bill presentment – same idea – offer, join or ignore
  • shift in business model from generalist to:
    • product (manufacturer) – offer loans and deposts through others channels
    • distribution (channel) – sell products & services of others – Open Finance (Forrester)
    • segmentation (customer type)  – focus on a niche market, although most interpreted as the generalist, all things to all market which is where most banks ended

Relevance to Bankwatch:

The problem today is that Banks are on strategy defined 6 – 8 years ago to bricks and clicks, focussed on customer retention and wallet growth.  Customer Relationship Management (CRM) became the strategy de jour.  Who would claim that has worked?  Seibel disappeared inside Oracle for a reason.

Banks are all on the same strategy, focussed on mortgage as the entree, and upsell with other services later.

There is nothing out there that aims at shifting the balance of share of market in a substantial way.  This is not about acquisition or mergers – we have done that, and “too big too fail” is too fixated in everyone’s radar now, or until capitalisation is fixed, in any event.

No, this is about business model shifts … shifts that would have a target of:

  • double digit percentage shift in share of payments,
  • extraction of share of deposits and payments from an existing industry (the Starbucks example),
  • exponential elimination of costs relative to competition
  • focus on what your are good at and eliminate the stuff you are not good at

Business models –

Mr Bank Chairman …  what is your business model, and how is it different than the competition?

Supplementary question –

Who is your competition?  Do you lost sleep over Citibank and Wells, or Tempo and Wesabe?  Does your answer worry you?

PS …  as I finish this post the most telling thing is something I have become acutely aware of.  The blog categories I set up 5 years ago no longer apply, until I do a retrospective post such as this.  Either those were really bad ideas, or ideas yet to come.

RBC speak about convergence for EBPP and statements

The commentary here from Colin McKay, vice-president of e-business architecture RBC in this video interview, is refreshing to hear from a Bank.

RBC discusses client reporting and customer statements | IT World Canada

Some notes from the interview, then commentary and discussion:

  • Old process had product and IT groups generating 18 separate statements in different formats but most ending up in print
  • each statement feed was formatted specific to the output, eg, print or web
  • each of the 18 had their own processes
  • all 18 feeds have been directed to a common store, and stored as raw data
  • the 18 raw data feeds from the core systems, are now amalgamated into a “Common Composition Engine” (CCE)
  • CCE can output in any format to print, web
  • most customers do not read statements, so the current practise of storing all in PDF format is wasteful and inefficient
  • CCE will eventually be offerred on demand, and on request, this could be PDF on demand, or web on demand
  • the Customer Preference Engine will allow customers to aggregate the data of their choice, including marketing messages,and product messages into a customised statement in the format of their choice
  • uses Telephone companies as an example of information display versus statement format.  The notion of a statement is being challenged by the web experience, and is redundant for many customers
  • He speaks of Electronic Bill Payment and Presentment (EBPP) and social networks.  “people go into town and do multiple things, vist grocery store, hardware store, and the bank;  there is a desire to conduct multiple business transactions at social networks in the same way;  what we are seeing is a convergence”

Relevance to Bankwatch:

Great interview but that last point needs some discussion.  But first with regard to the problems of multiple products and statements, the solution to the problems all banks face is clear, and he articulates it well.  The notion of on demand and in the format and design by the customer makes sense.

The notion of a social network as being analogous to “going into town to conduct business” requires some thought though.  In the real world we have Wal-Mart with photo, bank, restaurant as well as their core service of merchandise.  We have malls, with a variety of stores and banks.  We have Main St with a variety of stores and banks.  Finally we have other cities and countries that we can visit to conduct transactions.  The nice thing about the web is that it can be all or any of those.   It seems to me if we use this analogy, that the town is the web, and the concept of malls, stores, banks, and big box stores are all sites within the web, exemplified as different types of aggregation or not.  An we can get to that web using laptops, PC’s or mobile.

Customers will gravitate to the methodology of their choice, but they will require help to visualise how that future might look.  There is scant evidence that Facebook is viewed by users as that place for convergence and aggregation, or the place where they go into town to “conduct business transactions”.

In fact the evidence suggests that people are avoiding those things that get in the way of their social interaction at Facebook.  My own observation is that the jury remains out as to a desire for people to aggregate financial information anywahere except with their FI.  I know this contradicts the general movements of convergence and aggregation on the web, but so far financial services have not been pulled that way by people, which is probably dirven by privacy, security, and identity theft concerns.

Having said that it is possible if RBC display how that might work in a safe secure and convenient and non-intusive manner, that customers will accept receiving their bills and reminders inside their Social Network environment, alongside their social conversations (but obviously hidden from the view of others).  Or is this more of a channel need?  Aggregation at the device level, ie PC, mobile?  In any event its a great conversation and the rioght conversation that RBC are promoting here.

Thoughts?  Do you want to receive your statements, bills and notifications elsewhere than say at the bank site, and in your email?  If so where and how?

Written by Colin Henderson

April 15, 2009 at 11:06

Bank of America making more significant moves in social media

As noted on the BofA Future Banking blog, they are now also seeking out customers, or others needing assistance on twitter.  This is consequential stuff for a Bank.  Here are a few sample twits.  User names masked here.  Clearly something has taken hold at BofA that is setting them apart from most others, and moving them into Wells Fargo territory.  Interesting stuff, and other Banks take note.

Bank of America on twitter

@_______ Can you send me a DM with your contact information? I’ll give you a call to see what we can do. Thanks!”

Lock yesterday at 1:25 pm – Comment HideMore
“@________ I work for B of A, were you able to get it resolved? Anything I can do to help?”

Written by Colin Henderson

January 15, 2009 at 16:44

Gen Y – change the generation, or change the strategy – which approach is most likely to succeed

I have long stated that understanding and building for Gen Y is an essential basic approach for online banking applications, and I refer you back to this post from 2 1/2 years ago which noted the view of Charlene Li while she was still at Forrester.

Today I was pleased ot find this site that is written by a Gen Y’r and snf focusses on Gen Y at work.  It is insightful. and much to learn from here.

Relevance to Bankwatch:

Many of the views will challenge existing thinking and help to force that ultimate question – do we try to  change the generation, or do we change the strategy.

Supplemental question – which approach is most likely to succeed?

Written by Colin Henderson

January 12, 2009 at 11:47

A hero for the information age | we are all William Tyndale

Further evidence in support of the changing times we face, and that they are nothing new – epochal change happens relatively often – just at periods far enough apart that we don’t remember. The Economist picks up on a ‘radical’ from ….

A hero for the information age – Subversion, espionage and a man who gave his life to disseminate the Word | The Economist

But the country’s masters face a dilemma: the very technology, communications and knowhow that are boosting national fortunes also threaten to undermine the old power structure.

… not China today they say, but London in 1523.

The context was that of a society where the dominant book was the bible, and the idea of anything else being written down, and read by people was subversive and revolutionary. This was a time when books and pamphlets were appearing, and being destroyed.

In October 1526 William Tyndale’s English translation of the New Testament was burned in London by Cuthbert Tunstal, Bishop of London. [Wikipedia]

The point of the Economist piece is that it is wrong for practices in China and other oppressive countries where Internet and new technologies are suppressed – wrong and also doomed to eventual failure. I would add in those industries that are not re-inventing itself at this time.

Book burners are all around us today – yet we are all William Tyndale.


Here are the key sections of what is a long and wonderful piece.

AN EMERGING nation looks increasingly confident as a player on the world stage, thanks to a mixture of commercial prowess and deft diplomacy. In its capital and in coastal cities, you can feel the excitement as small manufacturers, retailers and middlemen find new partners across the sea. But the country’s masters face a dilemma: the very technology, communications and knowhow that are boosting national fortunes also threaten to undermine the old power structure.

China in the 21st century, contemplating the pros and cons of the internet? No, Tudor England, at the time when a gifted, impulsive young man called William Tyndale arrived in London—not to make his fortune, but to transform the relationship between ordinary people and the written word. As he soon discovered, London in 1523 was a city where ideas as well as goods were being disseminated at a pace that frightened the authorities, triggering waves of book-burning and repression.

As a side effect of close commercial ties with northern Europe, England was being flooded with the writings of a renegade German monk called Martin Luther, who had openly defied the Pope and insisted on a new reading of the Bible which challenged some of the Catholic church’s long-established dogmas.

In some ways, Tyndale was poorly equipped to survive, let alone thrive, in this feverish atmosphere. He was no wheeler-dealer; more of an idealistic scholar whose linguistic gifts were so remarkable, and hence so subversive, that he was drawn into high religious politics.

Written by Colin Henderson

December 18, 2008 at 16:06

NCR experiments with Microsoft Surface for branches | Finextra

While this feels a little bit like a solution chasing a problem, its nice to see some experimentation happening.  In particular the interaction between the customers phone and the employee desktop is interesting. 

NCR taps Microsoft Surface technology for branch transactions | Finextra

Mark Grossi, VP, advanced development, NCR, says: "NCR knows that our bank customers want faster and easier ways to conduct transactions. This prototype demonstrates how assisted service technology will continue to enhance interactions between banks and their customers."

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Written by Colin Henderson

November 19, 2008 at 23:20

“Own the conversation by improving the conversation” | gapingvoid

This long (8,000 words) but incredibly worthwhile post from Hugh a few days ago is a classic.  It expounds on the marketing and what it means in todays environment.  I will resist the temptation to call it new marketing or any other buzz word.  Its just a worthwhile read, and essential reading for bankers if they want to get inside the head of new marketing (oops .. I said it)

He speaks of the shift from the old way of marketing and why it no longer applies.  There are two core drivers, although one might argue they are related – the inverse of each other to a certain extent, but anyway:

  1. the invention of the internet
  2. the demise of what Seth Godin calls the "TV-Industrial Complex

The central premise is that of the “social object”. Don’t get hung up on the Blue Monster thing – its just an example.  Also i suggest you don’t read into this that it does not apply to banking, at least until you have assessed all the implications.


How does one build a useful service around social objects? Five key principles.

  1. You should be able to define the social object your service is built around.
  2. Define your verbs that your users perform on the objects. For instance, eBay has buy and sell buttons. It’s clear what the site is for.
  3. How can people share the objects?
  4. Turn invitations into gifts.
  5. Charge the publishers, not the spectators. He learned this from Joi Ito. There will be a day when people don’t pay to download or consume music but the opportunity to publish their playlists online.

Here are some examples of social objects:

  • iphone
  • Nike running shoes
  • starbucks cup
  • gmail invites (during the early days)
  • bottle of wine

But lets step back to why the social object is necessary and in the context of the shifts relative to internet and TV.

The Social Object, in a nutshell, is the reason two people are talking to each other, as opposed to talking to somebody else. Human beings are social animals. We like to socialize. But if think about it, there needs to be a reason for it to happen in the first place. That reason, that "node" in the social network, is what we call the Social Object.

Hugh says “In terms of communication, the company no longer has first-mover advantage.”  Traditional marketing wants to control the message, walk the customer through the “marketing funnel” and get them to select the optimum and hopefully most expensive product.

Traditional marketing is taking the same behaviours into the new internet space.  They have discovered bloggers.  I get emails all the time from PR folks, or from companies direct.  There are two types:

  • those trying to get to know me, and the blog purpose.  They have studied the blog, the comments and have a sense of the blog purpose.  I listen to them – don’t always agree, but I listen.
  • those that send me something that has obviously been sent to a gazillion other blogs, without context, and often not on my radar.  I ignore, and if they do it more than twice, they get ‘report spam’.  Sorry but welcome to new marketing.

Lets go to the title.  What a power statement

"Own the conversation by improving the conversation."

Is your bank having conversations with customers online?  Ask to read the email responses from your call centre.  Are they:

  1. scripted
  2. spontaneous

Read those emails as a customer – how do you react to them?

The first question you should REALLY ask yourself is:

"How do I want to change the way I talk to people?"


The definition of a social object.

The Social Object, in a nutshell, is the reason two people are talking to each other, as opposed to talking to somebody else. Human beings are social animals. We like to socialize. But if think about it, there needs to be a reason for it to happen in the first place. That reason, that "node" in the social network, is what we call the Social Object.

Now that its defined lets not forget that its not that important in and of itself.

The final thing to remember is that, Social Objects by themselves don’t matter in the grand scheme of things. Sure, it’s nice hanging out with Lee talking about Star Wars. But if Star Wars had never existed, you’d probably still enjoy each other’s company for other reasons, if they happened to present themselves. Human beings matter. Being with other human beings matter. And since the dawn of time until the end of time, we use whatever tools we have at hand to make it happen.

Relevance to Bankwatch:

I think at its basic form, the idea of the social object is to provide context for a conversation – context that works for both parties to the conversation.

Written by Colin Henderson

November 16, 2008 at 03:46

Some fresh thinking – The New American Bank Initiative (NABI)

I worry about the bailout plans led by newly famous Gordon Brown (Prime Minister UK), and which every other world leader is falling over themselves to adopt.  Such an approach is natural for Brown and his political leanings, but to see it occurring around the world to the extent it is happening is worrisome. 

That worry is exacerbated now that we see proposals to help out the auto manufacturers.  This is protectionism by another name, and will result in worse companies with worse products.  The same can be said of Banks.  How can a bank with a financial tap opened from the government be motivated by anything but keeping that tap open.  This is dysfunctional to making the service better and more attractive for customers.

So it was refreshing to encounter this thinking and the paper that makes the proposal, however its still worth digging deeper to understand if this will be better or just another way of creating dysfunctional government backed enterprises.

Forget the bailout, start over: the New American Bank Initiative | O’Reilly Radar

The bailout of the US financial system isn’t working. The government’s rescue plan has fundamental flaws, including incentives that favor the failed firms, not the country as a whole. New ideas are needed. In "New American Bank Initiative:

In this paper, we argue for a New American Bank Initiative: use the $700  billion in government funds to capitalize new banks and distribute the shares of the new entities to the American People.

These new banks would then acquire the operational and human capital  assets of failed banks in FDIC receivership

The paper goes on to outline the backdrop to their proposal.

The core issue with the current crisis is that the financial system is no longer properly functioning as a conduit of capital from savers to investment projects that generate real economic growth. The focus of every major proposal to date has been to inject liquidity and capital into current institutions in the hope that it will build confidence and start lending again to real projects (i.e., unclog the conduit).

First the scale of the US initiative is noted.

$700 billion is a huge amount of money–more than the equity book values of Goldman Sachs, Morgan Stanley, JP Morgan, Citigroup, Washington Mutual, Bank of America and Wachovia combined.

The basis of the NABI solution is to construct 20 new banks across the country, and eliminate government interference in those organisations, but transferring ownership to the US people.

To avoid a concentration of risk, the capital should be distributed amongst at least 20 new institutions. To avoid the hazards of government ownership or sponsorship, the shares of these institutions should be  distributed to the American people (each bank can have 300m shares; one for every American man, woman, or child).

Relevance to Bankwatch:

While I applaud the notion from the perspective of creativity and innovation, its not clear to me how the business strategy would be defined for the 20 new banks, other than by the US Treasury, and that might be worse than the Paulson plan.  At least the Paulson plan retains the business and strategy drive from the existing bank leadership to counter the government bias.

Having said that there is something there in the idea of finding a way to bring the leverage of the $700 bn that will retain innovation, yet retain a credible banking system. 

A fresh proposal:

Split the $700 in two.

  1. $350 towards a US Government owned credit union.  Provide the mandate to offer basic banking, account, loans and mortgages.
  2. Use the tax system, or other methods available to government that support startups that keeps the innovation in the financial services startups.  Aggressively review the regulation of financial services, and fast track changes to accommodate internet. 


The problem with banks is confidence.  The reality of banks going under is irrelevant to most other than stockholders, but they understood the risk of investment. 

Point 1. above offers customers a safe structure to restore confidence.  Customers who are afraid of banks disappearing and taking their money with it could shift to the US Government bank.  The rates would be terrible, the service basic, but its safe. 

This frees the existing banks to sort out their problems write off their bad debts, including telling the truth about their bad debts, instead of the current exaggerations.  Incidentally most estimates place mortgage defaults at no more than 10% overall.  That means 90% are current.  So why does a bank need a bailout if their mortgages are still relatively current?  The headlines scream that sub-prime mortgage loans have lost all their value but that’s simply not true, or at least not the whole story.  The banks need to evaluate their portfolios, loan by loan, and define the write offs – deal with that, and move on.  Its simply ridiculous to see companies like AMEX proposing to become a bank – just so they can get money.

Point 2. will offer support and space to accommodate creativity and alternatives that will further pressure the banks to stop whining and move on. 

Thoughts welcome – how should the US Government use the $700 Bn if at all.

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Written by Colin Henderson

November 13, 2008 at 12:57

The Enterprise of the Future in Financial Services | Five traits

Here is another study on the characteristics of financial services required to survive.  IBM is always thoughtful and this one is no exception.  They entitled the piece as applying to Financial Markets, but I have interpreted this to apply to Financial Services, generally, and not just say money markets.  Since they spoke to 1,000 CEO’s I think that assumption is reasonable.

The enterprise of the future in the financial markets industry | IBM

What will the financial markets enterprise of the future look like? To answer that question, IBM spoke with more than 1,000 CEOs from around the world. These conversations, together with our statistical and financial analyses, provide a unique perspective on the future of the enterprise. During this critical point in the market, five core traits of the enterprise of the future revealed through our study provide important implications for the financial markets industry—an opportunity, if not a mandate, to reevaluate business and operating models.

The enterprise of the future in the financial markets industry (188KB) – pdf

The central point is that this is no longer business as usual, and whether startups or old businesses, the traits mentioned are core to survival.

The five core traits of the Enterprise of the Future revealed in the IBM Global CEO study hold important  implications for the financial markets industry as it navigates one of the most financially devastating
periods in history

The five traits [only partial implications shown here – click through to IBM for full report]

  1. Hungry for change

      Implications:  … having the right governance, culture and incentives will allow firms to manage change, not simply react to it.

  2. Innovative beyond customer imagination
      Implications: … Moving slowly on this trend puts firms at risk of losing clients to innovators that are improving client collaboration and segmentation capabilities …
  3. Globally integrated

      Implications:  To drive faster and bolder innovation, employees need the means to collaborate openly across organizational fiefdoms. And despite the industry’s bias toward proprietary intellectual capital and a do-it-yourself approach, market realities are making external collaboration even more crucial.

  4. Disruptive by nature

      Implications:  Firms must also nurture a series of innovation programs that span multiple business
      model areas and include industry-changing plays. In this industry, perhaps more than most, technology will serve both as an enabler and an instigator of business model innovation.

  5. Genuine, not just generous

      Implications: Their negative reaction to client and regulator demands for increased transparency and ethical behavior may be causing financial markets firms to underestimate a major financial opportunity. We believe industry leaders will find ways to grow their bottom lines while being a socially responsible role model. They’ll not only work to become more “green” and invest in social causes, but also eliminate incentives that encourage unethical behavior inside their own ranks.

Relevance to Bankwatch:

The most intriguing part for me about this paper is that none of these characteristics come natural to any financial institution.  There are a couple of exceptions for one or two of the points and while I accept that, I can think of no institution that has all five.  This particularly applies to big banks.  Any exceptions within individual traits would be in the Credit Union world.

All five traits require a deep look inside the culture of the organisation, and the ability to see yourself as others see you.

Written by Colin Henderson

October 23, 2008 at 09:31

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